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• 17 Jul

  What Tools Does The UK Have To Fight Recession?

  There was an interesting piece in the Telegraph on the 15th of July 2019, saying that according to the Resolution Foundation, the U.K.'s recession-fighting tools are already almost exhausted. This leaves the UK economy ill-prepared to battle the next economic slump when it arrives.

  Recession Fighting Measures Almost Exhausted

  The article goes on to describe how interest rates are already too low to be significantly cut, whilst the Government is heavily indebted from borrowing during the financial crisis, and in the subsequent years.

  Risk Of Imminent Recession?

  Thankfully, their analysts are not predicting an imminent recession, but there are risks stated such as changes to global economic conditions, the US-China trade war and continued uncertainty over Brexit.

  This echoes my own feelings about the recent economic dips, where significant amounts of money have been pumped into the economy in order to minimise the impact that we all feel. This included propping up banks, which were bailed out to prevent if from failing. I know from speaking to one of the challenger banks, that they thought that this had robbed them of the opportunity to step up to fill at least part of the void, had the banks in question been removed from the banking arena.

  Are There Any Further "Tools" To Discover?

  Whilst the article calls for urgent work to find "further tools which could be used to stimulate the economy in another crunch", it seems hard to imagine what these tools might be, when we have already "almost exhausted" the available measures as mentioned in the article.

  Whilst I am no economics expert, it would seem to me that there is only so long that anyone can continue to prop up the UK economy. My concern would be that when the next downturn arrives, the effects could be far more dramatic, as we have already almost exhausted the measures available to minimise its impact. It may eventually be time for the UK economy to pay the piper.

  How Can You Protect Yourself From Recession?

  What can we do to protect our businesses from recession? A very difficult question that is impossible to fully answer, my suggestions would include the following:

  • Keep your costs under tight control.
  • Seek to spread your customer base, to prevent reliance upon a single debtor.
  • Get your finances, and cash flow, in order - with additional working capital available, beyond what you might expect to need.

  By Glenn Blackman